Nationwide: Housing market cooling may be short-lived

Nationwide, Britain’s biggest building society, saw a sharp fall in mortgage lending in the last three months, it said today, further underlining the cooling housing market.

But finance director Mark Rennison remains confident it will be a short-term dip. He said: “Whether, as we get beyond the summer recess, consumers return to the market is hard to call. But, whatever, it still looks likely to be a short-lived downturn.”

Rennison’s comments came as estate agents website Rightmove said that London house prices fell by 5.9% in July — the largest single month fall for more than six years.

Both Nationwide and Rightmove said that the normal seasonal slowdown in the housing market looked greater than usual.

Rennison said that the Mortgage Market Review, which came into force in April, had definitely been a factor. “The timing of when we saw some elements in the market start to cool was very much in line with MMR,” he said.

“But then the MMR effect has unwound, or is about to, quite quickly as all lenders seem to have got it well bedded in. It may still delay some buyers just because it is a more complicated process.”

Rennison also believes the real slowdown in the market was consumer driven. “Consumers were uncomfortable with the rate of house price inflation, the actual price of houses and, to an extent, the MMR changes,” he added.

“At the same time, some lenders, notably the High Street banks, chose to cool their heels for a few months. There are signs they are returning.”

Nationwide’s gross mortage lending in the three months to the end of July fell from £6.4 billion to £5.8 billion with its share of the market down from 15.5% to 11.4%. Depite that, underlying profits more than doubled from £121 million to £263 million.

Rennison said: “The same quarter last year was pretty exceptional. We are now back to more normal levels of lending and are very comfortable with that.”

Nationwide’s usual average market share runs between 10% and 11%.

The building society attracted 110,000 new current account customers, claiming a 10% share of those customers who moved after the introduction of new simpler account switching rules.